CryptoBlox Technologies Inc. (CSE: BLOX) acquired a data center builder that uses air cooling and heat recapture technologies to help cut costs on its Bitcoin mining operation for $11 million.
The company entered into a share purchase agreement on Tuesday to acquire all of air-cooled data centre specialist, Redwater.
Air cooling and heat recapture enhance energy efficiency, reducing operational costs and environmental impact for crypto mining. These technologies promote sustainable practices and optimize efficiency of the mining facility by managing heat generated during mining.
Cryptoblox has also acquired the rights to develop a location in Sturgeon County, Alberta, Canada for its operations. This location will be used as the base for Redwater’s advanced facility dedicated to mining cryptocurrencies.
CryptoBlox has agreed to acquire all of the shares of Redwater. In exchange, CryptoBlox will issue 220 million common shares of its own to the shareholders of Redwater. Each share is valued at $0.05, resulting in a total transaction value of $11,000,000.
Share issurance will come in two parts. Initially, 118.2 million shares will be given to Redwater shareholders upon closing of the acquisition, and the remaining 101 million shares will be delivered once Redwater achieves specific milestones as outlined in the agreement.
The acquisition of Redwater was made possible with the assistance of True North Data Systems Ltd. (TNDS), based in Calgary, Alberta. TNDS acted on behalf of the site owner, an oil and gas producer.
The site owner is interested in utilizing the natural gas associated with oil production, which is currently being burned off . Redwater plans to make use of this waste gas as a fuel source for its mining operations, which is both environmentally sustainable and cost-effective.
“Leveraging the untapped potential of flared gas as a low-cost fuel source presents an exceptional opportunity for our mining operations” said CryptoBlox CEO, Taryn Stemp.
To support its operations, CryptoBlox has plans to establish a long-term gas supply agreement (GSA) and site lease with TNDS. This agreement will enable the development of power generation assets to support the mining operations at the site.
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Alberta offers a premium for cryptocurrency miners
After becoming a subsidiary of Cryptoblox, Redwater will aim to set up 0.5 to 1.0 MW of generation capacity and mining enclosures within the next 30 to 90 days. This will allow for the installation of 233 high-speed application-specific integrated circuits (ASIC) that CryptoBlox is acquiring as part of the agreement.
Redwater, in collaboration with TNDS, has further ambitions to expand its generation and mining capabilities over the next 18 to 24 months. The goal is to potentially achieve a total capacity of 3 MW or more. As part of its growth strategy, Redwater will also explore the possibility of providing additional power capacity to the Alberta grid during peak demand periods.
Alberta has become highly desirable for cryptocurrency mining. The region possesses abundant energy resources, particularly natural gas and oil, which can be effectively used to power mining operations at a lower cost. The availability of competitive energy prices, along with a well-established energy infrastructure, contributes to the profitability of mining activities.
Additionally, Alberta offers a supportive regulatory environment for the cryptocurrency industry. The provincial government has shown a positive attitude towards blockchain technology and digital assets, creating an environment that encourages the growth of cryptocurrency businesses.
This regulatory support provides stability and confidence for companies operating in Alberta, making it an appealing destination for those seeking a favorable legal framework.
Companies involved in mining cryptocurrency in Alberta include Hut 8 Mining (TSX: HUT), Modern Mining and Bitfarms (TSX: BITF).
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